Gov’t hikes subsidized butane prices by up to 50%

Gas cylinders just got more expensive: The government has hiked the prices of butane gas cylinders as part of efforts to rationalize subsidies for fuel, according to a decision published in the Official Gazette. The price hikes came into effect yesterday morning.

The new price tags: The price of household cylinders has gone up 50% to EGP 150 ex-factory, while the price of cylinders for commercial use has increased 33.3% to EGP 200 ex-factory. Bulk gas prices have been raised to EGP 12k per ton, excluding transportation freight.

The rationale: Global price increases have driven up the cost of butane, necessitating domestic hikes to alleviate the burden on the state budget, a senior government source told Enterprise. Nevertheless, butane continues to be heavily subsidized by the state, with the actual costs standing at EGP 200 for household cylinders and EGP 450 for commercial cylinders, according to our source.

The payoff could be significant: The price hikes are expected to save the state over EGP 27 bn in annual expenditures, our source said.

There’s a steady supply of butane: An average of 1.5 mn cylinders are distributed to warehouses daily, our source said, adding that import agreements are in place to meet market demand for the foreseeable future, ensuring a stable supply in the coming months.

Mazut bills for power facilities also went up: The Oil Ministry has raised the price of mazut supplied to power generation and production facilities to EGP 6.5k per ton from EGP 2.5k, while the price for factories unchanged after their last hike in July.

Gov’t has been putting the brakes on petroleum product subsidies throughout the year: The government bumped up the price of household gas cylinders by 33% in March and raised the price of mazut for most industries by 13.3% to EGP 8.5k per ton in July. Car fuel prices were also raised by 11-15% in July.

And further hikes could be in the works: The government has been studying the possibility of raising the price of natural gas supplies for the country’s industrial sector since July, a government source confirmed to Enterprise earlier this week.

The endgame is to suspend fuel subsidies altogether: The government plans to phase out subsidies for butane and other petroleum products entirely by the end of 2025, our source said.